Belgium By Lynn Novelli

REIT legislation established: 1995, Société d'Investissement à Capital Fixe en Immobilier (SICAFI)
Regulating body: Belgian Banking, Finance and Assurance Commission
Number of listed companies:14
State of current market: With 82 percent of the local listed real estate market held by SICAFIs, totaling more than $5 billion in market capitalization, the Belgian REIT market is considered mature and continues to attract foreign capital.
Legislative Actions: A royal decree on June 21, 2006 introduced important reporting and leveraging changes to Belgian funds. SICAFIs are now required to adopt International Financial Reporting Standards (IFRS) for all statutory accounts, and the maximum leverage for Belgian REITs was increased from 50 percent to 65 percent. In addition, the limitation that one asset may not represent more than 20 percent of a SICAFIís portfolio no longer applies if the property is leased or used by member states of the European Economic Area (EEA). This specification was created in advance of the 2007 launch of a new REIT to which the Belgian government transferred most of its office buildings.

Bulgaria By Jennifer Duell

REIT legislation established: 2004, Special Purpose Investment Company (SPIC)
Regulating Body: Bulgarian Financial Supervision Commission
Number of listed companies: 19
State of current market: Currently, there are 19 SPICs listed in Bulgaria, all of which have a market cap below $200 million. After earning clearance to join the EU, there was increased interest in the SPIC market, which subsequently fizzled because of relatively poor performance.

In addition to investing heavily in agricultural land, another unique feature of SPICs is the level of monitoring and supervision to which they are subjected. The SPIC Act requires entities to have a specifically appointed depository bank monitor the usage of SPIC resources. The bank is obliged to perform all payments on behalf of the SPIC.

Finland By Kyle Fishburn

REIT-like legislation established: None
Regulating Body: Pending
Number of listed companies: Pending
Legislative Actions: Finland’s Ministry of Finance established the Property Fund Working Committee in 2004 to investigate the feasibility of instituting a REIT. Ultimately, the committee’s final proposal did not include REIT legislation but provided for an open-ended property fund structure and a regulated limited partnership model. The provisions were subsequently passed by Parliament in February 2007 as amendments to the Finnish Property Fund Act and mutual fund legislation.

At the same time, the Commerce Committee of the Finnish Parliament released a statement calling for further actions to investigate the possibilities for a REIT-type entity in Finland. At press time, the objectives and schedule of actions were yet to be defined.

France By Kyle Fishburn

REIT legislation established: 2003, Sociétés d’Investissements Immobiliers Cotées (SIIC)
Regulating body: Ministre de l’Économie, des Finances et de l’Emploi
Number of listed companies: 10
State of current market: In January 2007, the market capitalization of the SIIC industry reached $65.3 billion and continues to attract steady international investment.
Legislative Actions: In the Amended Finance Act of 2006, the French senate passed a fourth set of revisions to its SIIC structure. The new SIIC 4 limits shareholders to hold 60 percent of shares under punishment of
corporate income tax liability and imposes a minimum floating stock of 15 percent at the time of an IPO.

Additionally, the bill created a new asset category of hotel, café and restaurant properties and encouraged joint ventures by simplifying the relationship between parent company SIICs and their subsidiaries.

Germany ByMichele Lerner

REIT legislation established: 2007, German Real Estate Investment Trust (G-REIT)
Regulating body: Bundesanstalt für Finanzdienstleistungsaufsicht (BAFIN)
Number of listed companies: 8
State of current market: No companies had converted to G-REIT status as of press time, though a few small firms had applied for pre-REIT status. IVG has announced plans to establish a REIT, but some companies, such as Boetzelen Real Estate AG, have canceled or delayed an IPO, lacking necessary demand for company shares. Analysts suggest that certain statutory restrictions and uncertainty over the impending tax reforms are impeding conversions to REIT status.

A large portion of German property is held by industrial corporations and does not meet expectations of the capital market. Ownership of such properties must be restructured in order to be made suitable for REIT status.

Legislative Actions: The German REIT law came into force on June 1, 2007, retroactive as of Jan. 1, 2007 and is supported by recent changes to various tax laws, such as the German Income Tax Act and the Investment Tax Act.

Ireland By Kyle Fishburn

REIT-like legislation established: None
Regulating body: None
Number of listed companies: None
State of current market: Ireland does not currently have a REIT structure in place. However, Irish PIFs (Property Investment Funds) and QIFs (Qualifying Investment Funds)—relaxed investment funds that allow income to accrue untaxed with no obligations for dividend distribution—offer some benefits similar to those of common REIT structure.

After experiencing a boom in property markets over the last few years, Irish real estate, in the first quarter of 2007, posted its lowest returns since the beginning of 2004. However, the Jones Lang LaSalle Commercial Property Index shows that returns are up 5.6 percent for the first half of 2007, and total returns from commercial property have increased by 15.9 percent since early 2006.

Legislative Actions: There is speculation that U.K. REITs will influence Irish investors, eventually leading to Irish REIT legislation. However, many analysts in the Irish property industry believe that it will be a few years before REITs are introduced domestically, due to the relatively smaller size of the Irish real estate market and the existence of attractive REIT investments abroad.

Italy By Kyle Fishburn

REIT legislation established: Pending, Societa di investimento immobiliare quotate (SIIQ)
Regulating body: Commissione Nazionale per le Società e la Borsa (CONSOB)
Number of listed companies: 4
State of current market: Approximately 1.5 percent of the underlying high quality commercial real estate market in Italy is currently held by Italian listed companies, significantly under the 10 percent global average. The Italian REIT structure is expected to facilitate the transfer of assets from the private into the listed market.
Legislative Actions: Italy’s Ministry of Economics passed new rules for SIIQ legislation in December 2006. However, at press time, legislation was yet to be implemented. Once legislation is in place, real estate firms may convert to publicly listed SIIQ status providing they comply with certain conditions, including stipulations that no one shareholder may hold more than 51 percent of the voting or revenue rights and at least 35 percent of the company’s shares must be owned by holders not entitled to more than 1 percent of voting or revenue rights collectively. The incorporated SIIQ companies must distribute yearly revenues for at least 85 percent of the lesser amount of either the net real estate leasing profit or the overall distributable operating profit.

Luxembourg By Michele Lerner and Kyle Fishburn

REIT-like legislation established: None
Regulating body: None
Number of listed companies: None
State of current market: Luxembourg established three real estate investment funds in 1988, the Collective Investment Fund (FCP), the variable capital investment company (SICAV) and the fixed capital investment company (SICAF). The rules for all three of these structures were amended in Part II of the Law of Dec. 20 2002.

The introduction of the Euro increased the number of highly-developed pan-European products, and Luxembourg’s flexible tax laws have stimulated demand for these investment vehicles. Luxembourg remains the top site for multi-country investment funds, numbering more than 30.

With specific REIT legislation pertaining to public ownership of property yet to be formally introduced, many of the current real estate investment funds remain unlisted.

The Netherlands By Allison Landa

REIT legislation established: 1969, Fiscale Beleggingsinstelling (FBI)
Regulating body: Autonomous election of FBI Tax Regime
Number of listed companies: 9
State of the current market: Competition for commercial property assets has grown fierce as more investors from the U.K. and the U.S. are showing interest in Dutch real estate—a market traditionally dominated by Dutch and German investors. As in the U.S., approximately 10 percent of the Dutch property market is owned by listed REITs.
Legislative Actions: The Dutch Senate began to discuss a suite of legislative proposals in July 2007 that are expected to go into effect before the end of the year.

The proposed legislation would relax fund residency requirements to attract more foreign capital by raising the maximum interest that a foreign taxable corporation can hold in an FBI from 25 percent to 45 percent.

Russia By Allison Landa

REIT-like legislation established: 2001, Joint Stock Investment Fund (JSIF)
Regulating body: The Federal Financial Markets Service (FFMS)
Number of listed companies: 50
State of current market: Historically, registration accompanied by large fees was required for Russian mortgages, which has hindered the development of the country’s real estate investment market.

However, notary and other fees for Russian mortgages were dropped in 2005, making mortgages a viable means to finance property. As a result, the number of potential buyers for Russian property has increased, giving the market a significant boost.

Initially, land developers established the first real estate mutual funds in Russia, using construction companies to draw investors. However, most sizable management companies are establishing real estate mutual funds to diversify business development. There are 50 Russian real estate funds currently in existence. Shopping centers are particularly popular and industry leaders project both Russia and the Ukraine to be the locations of Europe’s highest rate of growth in that niche.

Spain By Allison Landa

REIT-like legislation established: None
Regulating Body: None
Number of listed companies: 1
State of current market: Spain does not have a REIT structure, but does allow for some forms of privileged real estate investments. In 1994, two structures were enacted: real estate investment funds (REIF) and real estate investment companies (REIC). Both are supervised by the Spanish National Securities Market Commission.

In January 2007, the Spanish Parliament enacted the Income Tax Act and the Tax Fraud Prevention Act. These bills cut the capital gains tax and adjusted residency requirements, hoping to attract more foreign investments and eliminate money laundering and other property investment tax frauds.

At press time, there were seven real estate funds, two real estate investment companies and three German real estate funds registered with the Spanish National Securities Market Commission.

Legislative Actions: The effort to establish a Spanish REIT structure is complicated by Spain’s unfamiliarity with institutional investment. It is not likely that the current Spanish government will introduce REITs in the near future. Given that general elections are not expected until 2008, it is unlikely that REITs will be introduced before 2010.

Turkey By Phil Britt

REIT-like legislation established: 1995, Gayrimenkul Yat
Regulating body: Capital Market Board
Number of listed companies: 13
State of current market: Direct foreign investments in Turkish real estate have increased steadily since 2004, fueled by the growth of the Turkish economy. Consequently, foreign investments in Turkish REITs also have increased and analysts expect the Turkish real estate market boom to continue into 2008.

The total market capitalization of Turkish REITs is approximately $1.5 billion, less than one percent of the total Turkish commercial real estate markets.

U.K. By Phil Britt

REIT legislation established: 2007
Regulating Body: Her Majesty’s Revenue and Customs
Number of Listed companies: 11
State of Current Market: U.K. REITs are enabling investors to invest in commercial space and land in the office, retail, industrial and residential sectors.

Most commonly, small investors access REIT benefits through pension funds, but as the nascent UK REIT market matures, specific qualifications and other issues will be tweaked to allow investors greater access.

Legislative Actions: Following the launch of U.K. REITs on Jan. 1, 2007, the majority of companies that converted to REIT status were already publicly listed investment firms with commercial property portfolios. Health care and other specialty REITs, such as self-storage, are increasingly applying for REIT status.

At press time, there were pending clarifying amendments to deal with the treatment of investments by REITs in joint venture groups. These are expected to be enacted by the end of 2007.